Complex global M&A deals face increased merger clearance challenges, study finds

Some 43% of cross-border transactions over the past four years failed to close due to regulatory scrutiny

Merger clearance is getting tougher for cross-border deals Shutterstock

More than four in 10 complex global M&A transactions have failed to close since Brexit came into effect in 2020, underscoring an increasingly challenging dealmaking environment, according to a study from Weil Gotshal & Manges.

The analysis showed that while 43% of cross-border deals involving merger clearance in the US, EU and UK didn’t complete, 75% of transactions that did close needed either structural or behavioural remedies to satisfy regulators.

Complex global deals are also taking longer to close, with transactions needing around 18 months on average to secure antitrust approvals. The study found that complex tech-related deals were more likely to face in-depth regulatory scrutiny and were subsequently most likely to be abandoned by the parties involved.

Nafees Saeed, an antitrust partner at Weil, said: “The numbers underscore the importance of understanding the regulator’s position and the need for tailored strategies that accommodate credible proposals capable of convincing regulators across a number of jurisdictions.”

The study also identified a rise in so-called ‘non-horizontal’ concerns, where competitive harms could impact at different levels of the value chain. Almost a third of cases (31%) were held up because of these concerns. This suggests regulators are increasingly willing to pursue a novel and expansive approach to merger enforcement, Weil said.

Complex deals also had more chance of running into delays in the EU, with the European Commission more likely than regulators in the US and the UK to demand remedies before waving transactions through. However, regulators across all three jurisdictions demonstrated a willingness to block deals, underscoring the need for companies pursuing cross-border M&A opportunities to have a global strategy in place, Weil added.

Facing regulatory review doesn’t mean complex deals can’t still win approval if remedies are applied, as demonstrated with the recent Microsoft and Activision Blizzard merger, which closed last October, despite multiple regulators initially seeking to block the deal. Weil acted as Microsoft’s global antitrust counsel on the matter.

Global M&A activity slowed in 2023 for a second year in a row following a bumper 2021 that saw a record $5.8 trillion of global transactions. The value of deals increased by 38% in the first quarter of this year, totalling just under $800bn, according to LSEG data.

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